How Good Business Can Lift Apple’s Share Price

April 16 (Bloomberg) -- Early this month, Adrian Kingsley-Hughes made this prediction on Forbes.com: “It seems quite
possible for Apple stock to hit four digits in the next couple
of years, barring any missteps.”

The author probably imagines future missteps such as
overheating iPads, a possible unsuccessful foray into the
television-set market, or the failure of the company’s new chief
executive officer, Tim Cook, to live up to the legacy of Steve
Jobs.

Yet it is easy to imagine a whole different set of
problems, such as more worker suicides or deaths from explosions
at Apple Inc’s lead sourcing factory in China, Hon Hai Precision
Industry Co., known as Foxconn Technology Group.

The biggest misstep, however, would be for Apple to fail to
recognize that it now has an opportunity for the kind of
productive sweeping self-examination that Nike Inc. undertook in
the previous decade after its reputation was tarnished by
reports of poor work conditions and child labor at its
manufacturing subcontractors in the developing world.

Unfortunately, I fear Apple’s executives won’t “look up”
at their SR problems (which the company defines as supplier
responsibility, but I define as social responsibility, to
encompass environmental issues). Instead, they may continue to
“look down,” as they skillfully and sometimes arrogantly have
with most problems, which they try to solve through the
brilliance of their design, innovation, engineering and
attention to detail of their products.

It is tempting to dismiss sustainability as irrelevant to
Apple’s steady ascent toward $1,000 per share. That would be a
mistake: Just ask any put-out-to-pasture top executive from
Nike, BP Plc, Enron Corp. or WorldCom Inc. about the linkage
between corporate responsibility and corporate value.

If I were to play corporate-sustainability doctor, here is
some “iRX” for Apple’s leaders:

-- Approach the current challenges not simply as short-term
risks, but rather as a significant business opportunity linked
both to protecting current value, and to creating more. Tackle
them with the same meticulous attention to detail, design
brilliance, engineering prowess, market-winning aggression and
customer-gripping innovation you bring to all things Apple.

-- Recognize that while your current culture and strategy
of secrecy, paranoia, fear, message control and arrogance work
well in other areas, such as product development, pipeline and
launch, they don’t serve you well when it comes to SR, no matter
how you define it.

-- Understand that a significant proportion of your
employees care about making the world a better place. Engage and
deploy these employees, who are one of your most powerful
assets, to this purpose. They care. These days, some of them may
be embarrassed by and ashamed of their employer. They may even
be disengaged, unproductive, and dissatisfied.

-- After engaging your employees, recruit your huge
customer base in your sustainability quest. Expand your
comprehensive Apple Care program to a new one called “Apple
Cares,” for example. Incorporate your SR caring into your
brand’s out-of-the-box experience, make it part of Siri’s
knowledge bank, part of your cult-like following, part of your
app world.

-- Cook, the new CEO, shouldn’t try to step into his
legendary predecessor’s shoes, or cultivate his aura. After
announcing Jobs’s death, Cook sent out his first internal
communication to employees with the introduction of a not-so-ground-breaking employee-donation-matching program. I know this
because a former student of mine, who had recently joined Apple,
excitedly e-mailed to tell me. He was relieved that his new
employer, the world’s first $1 trillion company, might begin to
move from being a laggard in sustainability to a leader.

The sustainability reputation of the company matters to
this employee, as it does to the majority of his fellow
Millennials. My former student took a risk by leaving a very
sustainability-minded rival company in the hopes that Apple was
waking up. Cook is the first Apple CEO to actually visit China
and engage with Foxconn and its leadership. Fantastic start.
Keep going.

-- Add a new position to your executive leadership team: a
senior vice president of corporate sustainability. Choose a
bold, tough-minded and temperedly radical woman (since the rest
of your team is male).

-- Bring your top designers to the factories and
dormitories in China, and, together with Foxconn leaders,
develop less socially isolated working and living conditions.
Bring your top engineers over, too, and design less monotonous,
more aesthetically pleasing processes, factories and villages
for employees.

-- Press the Chinese government -- in fact, all governments
-- to improve laws and accountability on child labor, minimum
wages, and mandated working conditions.

-- Engage your education-business development unit to
penetrate the digital textbook and educational markets and, in
particular, the underrepresented sustainability-teaching market.
There is an urgent need to develop efficient, creative and
simple information on all things sustainability.

Apple is the perfect company to do it.

(Kellie A. McElhaney is the Alexander Faculty Fellow in
Corporate Responsibility at the University of California,
Berkeley’s Haas School of Business and a contributor to Business
Class. She is the author of “Just Good Business.” The opinions
expressed are her own.)

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